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spk00: The company will make forward-looking statements on the call today that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. The company undertakes no obligation to update these statements except as required by law. You can read about these risks and uncertainties in the press release this afternoon, as well as in our filings on CDAR. Note that the adjusted financial measures we speak today are non-IFRS measures, which are not a substitute for IFRS financial measures. All amounts referenced in today's call are in Canadian dollars, unless otherwise stated. Good day and thank you for standing by. Welcome to the WeCommerce Q4 2020 Financial Results and Stamped Acquisition Conference Call. At this time, all participants are in a listen-only mode. After this previous presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Chris Sparling. Please go ahead.
spk01: Thank you, operator. Good afternoon. As the operator said, my name is Chris Sparling, and I am the Chief Executive Officer of WeCommerce. Today, I am joined on this call by our President, Alex Pearson, and Evan Brown, our Chief Financial Officer. Earlier today, after the close of the market, we released our fourth quarter and fiscal 2020 results, which are now available on CDAR. I would also like to thank everyone for joining our inaugural analyst and investor call. Today, we're going to walk you through our year-end financial results and discuss our recent acquisition of Stamps, and then open the floor to questions. We'll begin with the financial review of the quarter. Evan?
spk03: Thank you, Chris, and good afternoon to everyone on the call. As the operator mentioned, we do report in Canadian dollars in all references to amounts on this call and in our published financial reports, unless otherwise stated are in Canadian dollars. So let's jump to the financial results. In the fourth quarter 2020, we generated consolidated revenues of $6.1 million, up 53% year-over-year. Net loss in the fourth quarter was $5.5 million compared to net loss of $300,000 in the prior period. The net loss during the quarter includes a one-time listing expense of $1.6 million incurred in connection with the reverse acquisition takeover that took place in December 2020. The fourth quarter also includes non-cash stock based compensation of $3.9 million relating to accelerated vesting of stock options. Excluding these expenses, net income for Q4 2020 would have been $30,000. The adjusted EBITDA for the fourth quarter amounted to $1.7 million compared to $700,000 in this prior period. For fiscal year end 2020, we generated consolidated revenues of $21.3 million, up 40% year over year. Net loss was $4.4 million compared to net income of $100,000 in the prior period. Excluding one-time expenses incurred in the fourth quarter, net income for fiscal 2020 would have been $1.1 million. Adjusted EBITDA for fiscal 2020 amounted to $6.3 million compared to $3.5 million in the prior year. So with that, I'll leave it there and pass it back to Chris.
spk01: Thank you, Evan. Our President, Alex Pearson, will join me now to add commentary around the stamped acquisition. As you can imagine, we are very excited to have stamped in the WeCommerce family. Our priority at WeCommerce is building, growing, and acquiring businesses that serve the Shopify partner ecosystem. We have a focus on acquiring businesses that offer growth potential, sustainable competitive advantages, and have the potential to become a leader in their particular market. In our view, Stamped meets these criteria. I'll pass the mic over to Alex to help walk us through the acquisition of Stamped.
spk03: Alex? Thank you, Chris. And hello, everyone. I'm delighted to share more information about Stamped, why we're excited about the business, and the opportunities to invest in the company over the coming years. For those of you who are hearing about Stamped for the first time, Stamped is an e-commerce marketing solution with one-click installation into the leading e-commerce platforms of Shopify, WooCommerce, BigCommerce, Magento, and others. Stent currently has two product offerings, reviews and ratings, and loyalty and rewards that integrate seamlessly and are sold individually or as a bundle. The products are delivered through a software-as-a-service model, with customers typically paying monthly or annually. Our acquisition of Stent closed on April 6th. We acquired Stent for $85 million U.S. up front with a contingent consideration of $25 million U.S. payable in Q1 2022, based on, among other items, stamp achieving revenue of $10 million for 2021. The upfront portion was funded with $35 million of cash on hand, $40 million of new borrowings under our new credit facility, and $10 million of equity, representing 1.36% of our shares outstanding after giving it back to the issuance. For the contingent consideration, we have the option of paying it in cash, shares, or a combination thereof. Stamps grew ARR to 11 million U.S. or 14 million Canadian at the end of 2020, representing approximately 100% growth year-over-year. Net revenue retention for Q4 2020 was approximately 125%, and Stamps generated a 66% EBITDA margin for fiscal year 2020. This transaction more than doubles WeCommerce's ARR and adjusted EBITDA and significantly increases our organic growth rate and percentage of recurring subscription revenue. On a pro forma basis, assuming the stamped acquisition closed on January 1, 2020, WeCommerce would have generated $31.6 million of consolidated revenues, of which 54% would have been recurring subscription revenue. and 13.1 million adjusted EBITDA, representing a 42% adjusted EBITDA margin. Stamps is one of the leading reviews, ratings, loyalty, and rewards providers for small and mid-sized merchants, which we view as those up to $50 million of annual sales. However, Stamps excels with enterprise merchants as well and counts Native, HBO, and Nine West as customers, to name a few larger clients. Merchants love Stamped. Its core reviews and ratings product has over 4,500 five-star reviews and a 4.9 overall ranking on the Shopify App Store. And it's got a similar review profile on other e-commerce platforms as well. Its second product, Loyalty and Rewards, launched last summer, and Stamped is seeing good traction there, especially as a bundle law firm. The combined suite allows merchants to leverage data across the two to better segment and target their customer base for optimized marketing, increased repurchasing, and improved customer engagement. Stant is truly a product-led company with a focus on the customer experience. Strong word of mouth propelled Stant to grow revenue 103% in 2020 with less than $400,000 of direct advertising spent. Stamp has an extensive ecosystem of partners, and it recently became a Shopify Plus certified ad partner, which positions the company well to continue growing its enterprise customer base. Stamp's customer obsession is reflecting in its business model as well. Stamp grows alongside the success of its merchant subscribers. Merchants often come into the platform with a basic or premium subscription and quickly upgrade to a higher price tier as they see the value in additional functionality and integrations. As those merchants grow, their monthly order volume stamps pricing increases while still providing a compelling ROI to merchants. Let's look at stamps compared to a few publicly traded SaaS companies with significant SMB customer bases. As you can see, Stance compares quite favorably. With a rule of 40 exceeding 160%, there's ample room to invest in the business and position it for growth. But we always look to balance growth and profitability. Lastly, Stance addressable market is large and growing rapidly. Shopify increased its merchant base by 64% last year to over 1.7 million. And while the COVID-19 pandemic certainly caused both temporary and permanent shifts in e-commerce, we see a blue ocean opportunity for Stamps. Stamps paying subscribers across all e-commerce platforms represent less than 1% of Shopify's merchant base at the end of 2020. Looking ahead, Stamps growth will be a mix of more of the same and implementing best practices to drive growth and expand value to merchants. Dant will continue to be a self-serve, product-led company providing excellent merchant value. We'll invest more in direct customer acquisition and we'll expand the customer success team to be a revenue-generating operation. Over the long term, we're exploring both new product R&D and tuck-in acquisitions to increase value for merchants. Further, we plan to invest R&D into providing additional functionality for non-Shoutify merchants. As I mentioned earlier, we borrowed $40 million U.S. under our new credit facility to partly finance the upfront cash consideration. Our existing BDC debt was repaid fully, so our total debt outstanding is $40 million U.S. We expect to delever throughout 2021 as we continue to generate strong cash flows. Thank you. I'll now turn it back to Chris. Thank you, Alex.
spk01: We see a lot of potential withstands. When we went public in December, we pointed to long-term goals like two-thirds recurring subscription revenue and 40% plus EBITDA margins that would transform e-commerce. Acquiring Stamped gets us well on our way to those long-term targets. We are confident in our portfolio of businesses and our growing acquisition pipelines. And we believe there are many more attractive acquisition opportunities in the Shopify partner ecosystem. And now, I'll pass it back to the operator to facilitate the Q&A.
spk00: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question is from the line of Daniel Chan from TD Securities. Your line is now open.
spk02: Oh, hi, thanks, and congratulations to the quarter. The growth on the top line seems to be pretty strong. Can you just talk about where you're seeing the most demand and opportunities between the different segments?
spk01: Yeah, hey, it's good to see you again. You know, especially by adding in stamps, we're seeing the largest amount of growth in the subscription revenue side.
spk02: Okay. And it's been a pretty dynamic environment. Any changes in the market activity so far this year relative to what you saw last year?
spk01: I'd say similar to what we said during the roadshow. You know, we steadily see more competition in the ecosystem, particularly from venture firms looking to invest in these high-growth companies. Just as an example, in the case of Stamped, we saw very steep competition from two venture firms trying to persuade the founder to raise money instead of sell. So very, very consistent with before.
spk02: Okay. And when we listen to Shopify's results, they mentioned that growth this year may be slower than last year. Is this something you expect for your organic growth rate as well?
spk01: I think that we have an opportunity to still expand within the ecosystem. Obviously, as e-commerce and Shopify's growth slows, it could have an impact. But we're very bullish just in our opportunities just within the existing ecosystem with merchants. Okay.
spk02: Now EBITDA margin came in a bit weaker for the quarter than in prior quarters. Just wondering if you can provide any color on the sequential decline in the margins.
spk01: Yeah, the largest reason was just the transaction costs with going public.
spk04: All right. Yeah, Chris, I can jump in there. It's Evan here. Hey, Ben. Hi, Ben. We did have one of our scheme businesses, an updater business, which we had to defer some revenue into 2021. And so we were expecting closer to $7 million. We came in at 6.3. If that wasn't deferred, it would have come in just over 6.7. So although we were still off, we weren't off as much as we thought.
spk03: And that's just due to the nature of how we need to recognize revenue for those 15-month data that we're selling. Okay.
spk02: And that's expected to come in next quarter, or is it deferred long or not?
spk04: No, it will come in over the next few quarters. It really depends on when they signed up.
spk02: Okay. Now moving over to talking about the M&A side of things, maybe any color you can provide on the acquisition pipeline. How have valuations gone given the multiple contractions we've seen in the public markets? Any color would be helpful.
spk04: Yeah.
spk03: Okay. Actually, Alex, if you want to take that, I think that'd be great. Sure. I'm happy to, Chris. Hi, Dan. It's nice to chat with you again. So I think we saw, and I think this is consistent with a lot of private market companies, in that the valuations go up quickly alongside the public market valuations, and there's a bit of a lag. So while the public market corrections, I think, has been swift for the past few months, I think we're seeing a bit of a slower decline on those valuations in the private market. As Chris mentioned, you know, there's obviously a lot of interest in the e-commerce sector, from proud equity funds, venture capital funds, and strategic acquirers. And so we see valuations still being similar to what we've seen in the past. I think what's changed is our general presence, and people are much more aware of what we're offering and how that's differentiated vis-a-vis venture capital and proud equity and strategic acquirers. And that's certainly played out in the case of Stamped, which, as Chris mentioned, two very viable suitors for venture capital financing.
spk02: Okay, that's helpful. Thank you. And can you talk about maybe what you're looking for now that you have Stamped in the portfolio? Does anything change in terms of companies you're looking for, maybe certain types of assets or capabilities they bring to your platform?
spk03: Yeah, I think the only thing that has changed with having stamps in the portfolio is looking at tuck in acquisitions for stamps. But away from that, we still look at businesses that are growing, profitable, our position to become leaders in a particular field, and our businesses that we ideally like to own for the very long run. And so we kind of ask ourselves the question of, do we want to own this business for the next 10 years as a general filter?
spk02: Okay. When you mentioned tuck-in acquisitions for Stamped, how do you differentiate a tuck-in acquisition for Stamped relative to something you'd roll in under, let's say, the Pixel Union organization?
spk03: Yeah, it's a good question. I think it's very much on a case by case basis. Obviously when it comes to tuck in at the. Pixel Union level or at Stamped, it's first and foremost, is this a acquisition that's been on the product roadmap, either at Pixel Union or Stamped, or is it opportunistic? Generally, those offerings are quite different. And so depending on the app, it most likely makes sense which one he would go to, if it is a tuck-in that is not a standalone.
spk02: Okay, so maybe, if I'm understanding this correctly, maybe if it's aligned to loyalty reviews, maybe that rolls under stamped, and then if it's any of the other, let's say, managing deals or offerings, then maybe under pixel union makes a bit more sense? Yeah, I think that's fair. Okay. I'm calculating you have about $44 million in net debt pro forma if we factor in the debt taken on for the stamp acquisition. I guess that takes you to about 3.4 times net debt to EBITDA ratio. That gets you close to the four times on your covenants. How are you thinking about capital structure right now and how you'll fund future acquisitions?
spk01: Yeah, I think Evan can talk to this a bit more. But, you know, we do have $20 million U.S., of capacity under a revolver and an additional 20 million under a delayed draw term loan. And there's also an accordion feature to increase our facility up another 15 million with, you know, the net leverage coming into four times. And I do think as Alex was speaking to in the presentation that we'll continue to deliver throughout the course of this year. But Evan, any additional comments there?
spk04: Yeah. I mean, Dan, you know, we are, all of our portfolio companies are generating healthy cash flow, especially in the recurring subscription revenue.
spk03: So, you know, we do have, you know, over $5 million of cash on hand at this point. And we do, you know, we do not expect to be bumping up against that threshold and those covenants. And, you know, as we go out to look at further acquisition, you know, this is why we're going to be a public company.
spk02: Okay. And then just a couple of questions on drilling down to Stamped, if I may. You did talk about the good cash flow. The free cash flow conversion has been very high for Stamped, around 100% for the last couple of years. Is this because they have longer-term subscriptions, so you get a higher upfront payment, or is there something else that's helping drive that strong cash flow conversion?
spk03: Yeah, I think you kind of hit it right on the head, Dan, which is customers are locking in discounts but paying upfront.
spk02: Okay, do you have some metrics in terms of how long some of those agreements are? Because I believe most of your Pixel Union customers are doing monthly agreements. How many of, like, what's the mix of, like, six-month agreements versus a year versus monthly for Stamp?
spk03: I can't share that mix, but if they are signing long-term agreements, most of those are one year. rather than quarterly or biannually. Okay.
spk02: Now, this is your first overseas acquisition. How is the integration going? How are you thinking about integrating it with the rest of your operations?
spk01: Well, I'd say we're not planning to integrate it necessarily with our existing operations. As we kind of talked about before, we're not necessarily synergistic in that regard. And the founder is motivated and engaged to help us. He's stepping down as CEO. and he's going to instead kind of focus on product development. We're bringing in a new CEO, Andrew Dumont, who's a seasoned operator that I've worked with in the past for a number of years. He's going to come in and take the reins as the CEO. And the rest of the team is very motivated to continue growing the business as well. The transition so far has been going phenomenally well.
spk02: Okay, that's helpful. And then you talked about Stamps customer base representing less than 1% of Shopify's merchant base. How big is Stamps customer base, and is there any overlap with your existing customers, or are they mostly new and additive to what you already have?
spk01: Yeah, Alex, do you want to speak to that?
spk03: Yeah. There's obviously some overlap as it relates to the 460s or the Pixel Union apps. But generally, the merchant at stamped I would say is a larger merchant than the other traditional companies, especially on the Pixel Union side. With 460, there is some overlap, but the way we think about this is those companies, such as 460 and Stamps, if they're coming to a partnership or a cross-selling opportunity, they'll do so if it makes economic sense to them, regardless of whether we are the ownership for them. Obviously, it helps that we are owners of both companies, but we don't necessarily look at it in terms of pure overlap of customers for those two companies that are, you know, offering quite different products. For tuck-in acquisitions, Dan, that would obviously be a point of consideration.
spk02: Okay. Yeah, that makes sense. I guess what I was alluding to is what is the opportunity for cross-sell? You talked about 460. That seems like a pretty natural fit. in terms of revenue synergies and potential cross selling? Is that something that you'll be pursuing? And if so, like, how would you be tracking that?
spk03: Yeah, I think the The opportunity on the stamp side is probably less cross-selling with 460. Certainly that's a possibility, but we think there's just a lot of low-hanging fruit in this business to invest profitably in customer acquisition, continue innovating on the product, scale the customer success team, and then think about tech and acquisitions as well, in addition to organic product R&D. So we see the opportunity there. a lot more within stamps than necessarily just by cross um looking across selling across the e-commerce portfolio okay and and just final question then given your focus on um product and and uh
spk02: Sounds like more marketing. If we think about, so Stamps has some pretty good growth and incredible margins. If we think about the next year, should we anticipate maybe the margins coming off a little bit as you invest a little bit more in the business? And then with those investments gaining traction, maybe the growth accelerating maybe a year from now? Is that a good way to think about it?
spk03: Yeah, I think you can think about it in probably a few different factors at play that was going to impact margin and growth as I would expect. You know, first is if there's any investments that are going to be made. You'll probably see those later this year rather than in the first quarter that we include stamped in our results. But we're coming off a potential extreme tailwind in e-commerce in 2020. And so we are cautiously optimistic, of course, with growth ahead. On the margin side, you have a bit of a natural balance in that. You know, we do plan to invest in profitable growth, but at the same time, this business does have healthy margins. And so it doesn't necessarily mean that we're going to decrease the margin too much just in the quest for growth here. We kind of look to balance profitability and growth for these companies. Okay. Great. Thank you. I'll pass the line.
spk00: Next is Robert Young from Canaccord. Your line is now open.
spk03: Good evening. Maybe just a quick finer point on that last question. The organic growth that you had expected through the RTO process, I think it was 25%. In light of the addition of stamps, is it worth revisiting that number?
spk01: Evan, do you have any thoughts on that?
spk04: I'm not sure if this is... I think, I mean, Robert, you know, it's one of these things where we really have to look at every business individually. And lots of businesses have different growth profiles. So Stamps clearly has a higher growth profile than some of the apps in Pixely, for example. So we look at that on an individual basis. When you combine them all together, you know, we've discussed our ambition for 25% organic growth as a sort of a marker. So I think that's a fair marker, but, you know, that's not – each app that we'll be growing and each of our assignments will be growing at a completely different rate, really depending on their stage.
spk03: Okay. I'm trying to reconcile the two statements there that likely there's some slower level of growth exiting 2020. It's a very unique year. And then roughly half of the current revenue is growing at 100% that you have there stamped. And so if I look at those two as edges of the envelope, there's a pretty wide range of potential growth. But it does seem higher than 25% to me as I look at it. Maybe next question would be around the deferred impact. I think you said that there was a it was a revenue recognition that would force some of the recognition through 2021. Is there any other color there just to understand the mechanics? So to understand how that might impact things in the future?
spk04: Yeah, for sure. I mean, as you know, any sort of SaaS business is going to have their revenue deferred generally.
spk03: The one that caught us a bit by surprise was Theme Updater app, which is the ability for a merchant to have access to the most up-to-date themes, and they pay for that on a yearly subscription basis. um and what what we didn't calculate and that's a portion of that we need to be deferred as we you know grow that and that business itself was in basically in beta for all of 2020. um so it cost a bit off off-guard when we uh when we did our you know the augers came into our frs 15 uh memo and uh and so that was about 360 000 for the year which comes right off of revenue and right down to either that so it comes off of both lines so That will be something that, going forward, as that business grows, it will have incremental additions to deferrals in the future, but it won't be necessarily anything as transitional as this one was. Okay, that makes sense. Maybe just a couple questions on stamps. You've said many times that you're indifferent on whether the founder departs, and it sounds like the current founder is going to stay with a product management role if i heard that correctly um you know maybe maybe a little bit of color on that and i think you said that it was a competitive deal process so was that a factor in uh your ability to close this deal was that arrangement and then maybe if you could maybe expand on you know what it was that you brought to the table that was better than these venture capital firms um was it the simple i think you highlighted
spk01: founder-friendly approach simple deal terms long term but maybe if you get to get into any more specifics that would be very helpful yeah i i kind of you know conversations like that have stopped a lot of storytelling and just storytelling how you know going to venture capital route is kind of taking a poison pill and is that really what he wants to sign up for because he really would be putting a gun to his head and i kind of think that the founder you know, to a man with a hammer, everything looks like a nail. His hammer was very much build an amazing product. But he wasn't necessarily strong in a variety of other best practices for running the business. There's no marketing efforts. And, you know, the explanation of value proposition and such could be a bit better. And so, you know, in the conversations with him, it was very much you know, what do you not like? What do you not want to do? And, you know, do you really want to size up or sign up to, you know, with these venture firms and have to build out this large team? Or maybe we can come in and, you know, put in someone who's the best in class CEO, who knows how to take a business that you've already built a good foundation of, take it from one to 10. And that really resonated with him. It's an unfair advantage to not be fearful of founders leaving and understand the weak spots they may have And just be comfortable hiring a few people to build out where they might be weak. Yeah, I wouldn't say it was, we didn't have to promise any role. He actually kind of was very happy to just, he wants to stay involved. He loves the product. He loves the team. He loves building. And so we kind of organically came to that outcome. And so I wouldn't say that we had to promise that in any form.
spk03: So as a founder that wants to focus more on product development than running the business and you're bringing someone in who can run the business, is that a good way to simplify that?
spk01: I'd say largely, yeah. I think that even when it comes to product development, I think he might be more in the develop new lines within the business as opposed to really leading a team necessarily. It goes back to what's his core strength and what's the best use case for him.
spk03: Okay, that's great. You highlighted very strong net revenue retention for the scams business. It's a significant component of your revenue now. So is that going to have a meaningful upward impact on the mix of your own churn? The other thing that jumps out is the low cost of acquisition. You could talk about those two factors and how that sort of changes maybe the dynamics of the overall portfolio.
spk01: That would be interesting.
spk05: Yeah.
spk01: I think we talked about this before, but we don't really track a blended churn across the portfolio. We really judge each company on the merits of their own business and the market and how they participate in the ecosystem. But yeah, Stamps net revenue retention at approximately 125% is very impressive. I missed the last part of your question. Sorry. I'll just ask a different way.
spk03: I guess my perception is that Shopify would have a high degree of churn, particularly for, you know, new merchants. And so this retention number seems very high. And so would that be at the high end of, you know, the type of retention you'd expect? Maybe that's a better way to ask the question.
spk01: I think that's probably a fair way to put it, just in answering your own question. We were very impressed. I'm very impressed with Stamped and the business that the founders built here. And his net revenue retention in this term, we're very impressed by.
spk03: The statement you made around building some tuck-ins against scams, is there an opportunity to consolidate in Singapore? I mean, that stuck out as a bit of a different region to me. Is there an ecosystem in Singapore that might be an opportunity now that you have a footprint there? Yeah, I can touch on that. So I don't know if there's necessarily a Shopify kind of partner ecosystem within Singapore. I mean, it's a good labor market, and it's obviously a very friendly place to do business. But that's kind of the beauty of all these businesses is that they're inherently just internet-based business, and the geography, to some extent, is less important than the traditional business. So I think about the token acquisition, not necessarily tied to a particular geography, but just about what makes the most sense. Does this accelerate the product roadmap? Does it add a lot of value to the merchant? And how do we think about the integration risks associated with that acquisition as well? Okay. Yeah. Maybe just a couple more. The themes business, I think you suggested that there was an opportunity to build a recurring revenue stream. I guess that's probably a small... project now, but maybe if you could give an update there.
spk01: Yeah, that's still underway. It goes back to the theme updater and Notion. So We're making progress on that, I'd still say. I still think of, you know, themes as being a bit of a toll bridge into town. And we're constantly looking at new and creative ways to monetize that toll bridge. And theme updater is still, you know, initiatives are still underway with that, especially just making it more creative and more valuable to merchants to sign up for. Okay.
spk03: Last question, just the, I think it said that there was an interest in perhaps investing some R&D for non-shopify um functionality and uh you know stamp obviously is you know beyond the shopify ecosystem and so maybe just talk about the focus on shopify and whether that's changed or if there's any you know more flexibility that you see going in the future given stamps and then i guess i'll pass the line yeah i still think you know i still i still like the line there are riches and niches
spk01: And so our preference and priority is still around Shopify's partner ecosystem. We have and we would consider exceptional businesses that operate on alternate platforms. And many of the businesses we do acquire operate on multiple platforms. But I still think there's an unfair advantage in focusing in the niche. And I really believe that Shopify is the – I'm very bullish on Shopify long-term. And I think that there's still more opportunity in that ecosystem.
spk03: Yeah, and certainly there'd be no – I mean, given that you're going to invest R&D, there'd be no interest in shutting down anything that's outside of Shopify. That would not be something you would do, obviously. Yeah, I know. Okay, that's it for me. Thanks, guys. Thank you.
spk00: Next is Martin Turner from ATB. Your light is now open.
spk03: Hey, guys. Thanks for taking the question. You know, my question was very similar to the previous one along the lines of talking about the different platforms.
spk04: Did you mention what R&D as a percentage of rev was or stamped and what you plan to take it to? Sorry if I missed that.
spk01: I don't know if we have – Alex, do we have what the R&D spend was historical to Stamps?
spk03: No, it's not specifically called out. You know, it was a pretty lean operation through most of 2020, and it was only kind of the second half of 2020 where they started increasing headcounts. And so we can't provide a kind of a go-forward to look at what R&D as a percentage of revenue could look like for Stamps.
spk01: Yeah, the founder really did build the entire product. It's quite the impressive effort.
spk03: Really, eh? Wow. You mentioned that they have approximately 1% of Shopify merchants or customers. What typifies that customer base? Is it all over the map in terms of size or type of merchant? Can you kind of give us a little color of it? Yeah, I touched on this briefly, but their core focus is the small and mid-sized merchants that we view as having up to $50 million in sales. The average monthly revenue for paying subscribers is around $73 U.S., and so if you translate that to an annual basis, that paying subscriber is paying an average of close to $900 U.S. per year. So that's the sweet spot, I would say, for stamps. That being said, they do have several kind of marquee clients whose annual sales are in the hundreds of millions of dollars. And just a few that we mentioned on the call, I'm not saying that these are all hundreds of millions of dollars, but some of the larger clients include Purple and Native and some aspects of HBO as well. Okay, super. And so you see them moving... you see that ARPU growth having a lot of potential as they are able to win bigger and bigger Shopify merchants? Well, you know, again, this is something I mentioned earlier, but, you know, the beauty of Stamped is it's customer-centered pricing. And so customers are upgrading to higher price tiers for additional functionality as those merchants grow themselves and have increasing amount of monthly orders. the pricing increases as well. And so Stamp just really grows alongside its merchants, regardless of moving up market. Thanks for taking my question.
spk04: Yeah.
spk00: No further questions at this time. I turn the call back over to you, presenters.
spk01: Thank you. And thank you, everyone, for your participation. This concludes our investor presentation. Thank you, everyone.
spk00: Goodbye. This concludes today's conference call. Thank you for participating. You may now disconnect. Have a great day.
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